An olympic struggle between oligarchs of West and East

by Alex Callinicos

Published Tue 4 Feb 2014

Issue No. 2389

David Cameron eyes Russian leader Vladimir Putin (Pic: G8 UK)

The Winter Olympics in Sochi start this week amid a welter of controversies. Radical lawyer Bill Bowring summed them up—corruption and cronyism surrounding the construction of Olympic facilities, the war between Moscow and Central Asian jihadis, Russia’s anti-LGBT law, and so on.

But underlying these is a more fundamental conflict.

Russia’s gas heats Europe and gives its oligarchs the billions to buy London mansions and football teams, and send their children to English public schools. But the Russian state under Vladimir Putin remains firmly outside the Western system of alliances.

One can speculate whether this was an inevitable outcome of the collapse of the Soviet Union. Putin’s predecessor Boris Yeltsin was much more pliant during the 1990s.

But the US under George Bush senior and Bill Clinton played a strong hand ruthlessly. They encouraged the devastating neoliberal shock therapy that impoverished most of the population and gave the oligarchs control of Russia’s natural resources.

Clinton also reneged on Bush’s promise not to expand Nato into Eastern and Central Europe. This gave Putin the support he needed for a project of rebuilding Russian imperial power. He has recentralised control over the energy industry in state corporations run by political cronies.

But, rather than return to Soviet-era state capitalism, Putin’s version of authoritarian capitalism harks back to the imperial glories and Orthodox Christianity of the tsars.

Hence the jailing of punk band Pussy Riot and last year’s anti-gay law.

Ensuring that Russia continues to dominate the now-independent states to its east and west that were once part of the Romanov and Soviet empires is crucial to Putin’s strategy.

In 2008 he fought a brief but brutal war with Georgia that scared the US away from expanding Nato to Russia’s borders. This was as much about Ukraine as it was about Georgia.

Absorbing Ukraine in the 17th century allowed Russia to emerge as a great power. Ukraine’s incorporation into the Western system of alliances would represent a potentially fatal threat to Putin’s strategy.

No-brainer

So when an arrogant and inept European Union refused to offer any money up front as part of an association agreement with Ukraine, it was a no-brainer for Putin.

He tried to lure president Viktor Yanukovich away with a mixture of threats and promises of financial assistance.

According to George Friedman of the strategic intelligence website Stratfor, Putin “is not interested in governing Ukraine. He is not even all that interested in its foreign relationships.

“His goal is to have negative control, to prevent Ukraine from doing the things Russia doesn’t want it to do. Ukraine can be sovereign except in matters of fundamental importance to Russia.”

Of course, from the perspective of Washington and Brussels, even this is bad enough.

They want no obstacles, political or economic, to the free flow of capital across a world that accepts the hegemony of US capitalism and its European junior partners.

So, as during the “Orange Revolution” of 2004-5, Ukraine is being ripped apart in the struggle between two gangs of oligarchs aligned respectively to the West and to Russia.

It’s hard to say who will win this particular proxy struggle. In the larger contest with the US, Putin enjoys economic advantages thanks to the high price of oil and natural gas.

The rouble has been hit by the emerging markets sell-off, but Russia has huge foreign exchange reserves and relatively low debts.

In the longer term, Russia’s dependence on energy is a weakness. Oil and gas count for 75 percent of Russia’s exports, but imported goods make up more than two fifths of retail sales.

Russia is far too weak to rival the US globally. This doesn’t mean it can’t exploit the relative decline of American power and Washington’s distraction by crises, as it has in Syria. The Russian exception isn’t going to go away any time soon.